Air India Becoming Larger Post-Merger With Vistara Is On Expected Lines; Positive For Sector: ICICI Securities

ICICI Securities Report

Tata SIA Airlines Ltd. (Vistara) entered into an ‘implementation agreement’ dated November 29, 2022 with Tata Sons Pvt. Ltd., Talace Pvt. Ltd. and Air India Ltd. in connection with the proposed merger of Air India and Vistara.

On completion of the merger, Singapore International Airlines will hold ~25.1% of the enlarged Air India (i.e. Air India including Vistara and Talace).

The merged entity will continue to operate both full-service and low-cost passenger services across the different airlines, with both domestic flights within India and international flights with India as its main hub.

Valuations implied by merger considerations (~$250 million plus 49% Singapore Airlines’ stake in Vistara in exchange for a 25.1% equity interest in the enlarged Air India) should be viewed in conjunction with the fact that Singapore Airlines has committed an additional capital injection in FY23/FY24.

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